ROYAL DUTCH SHELL HISTORY OF TAX AVOIDANCE

By John Donovan

The oil giant Royal Dutch Shell has a long history as a participant in what the Guardian has aptly described as “the murky world of corporate tax avoidance.”

In February 2009, the Guardian newspaper published an article under the headline: “Offshore – and out of reach to the Revenue“

Extracts

The Anglo-Dutch oil giant Shell, although it is still a British plc operating under UK company law, has shifted its trademarks to Switzerland and its main tax residence to the Netherlands.

Shell, meanwhile, has shifted ownership rights of its iconic scallop-shell roadside sign out of London to a third low-tax regime in Switzerland. It was part of a carefully planned merger of its UK and Dutch arms, which enabled the oil giant to keep many operations from the grip of the British tax authorities. For tax purposes, Royal Dutch Shell plc is now resident in the Netherlands. The company told us that the brand shift to the tax haven canton of Zug was not for tax avoidance, but for “entirely commercial” reasons. “There has been no impact on the Shell brand in the UK,” the company said. It added that there would now be “more effective and consistent management of the Shell trademarks”.

Another article on the same subject was published on the same day by the Guardian under the headline: “TAX GAP“

Extract

Ownership of the iconic scallop sign which appears on thousands of Shell petrol station forecourts has migrated to a Swiss tax haven.

The Anglo-Dutch oil giant which made $50bn (£35bn) in pre-tax profits in 2007, shifted its main tax-residence to the more benign climate of Holland after the merger of its twin UK and Netherlands arms in 2005.

Shell simultaneously moved the ownership of its immensely valuable brands. Legal ownership of the trademarks now belongs to a subsidiary set up in the low-tax canton of Zug, which is entitled to charge royalties for their use to other Shell companies.

The rights were shifted in February 2005 to Shell Brands International AG, a holding company registered in the former Alpine village of Baar, now part of a mini-conurbation joined to Zug itself.

The canton hosts about 18,000 companies, mostly foreign entities set up to take advantage of corporate tax rates as low as 8%, with personal tax for expatriate executives at a similarly enticing level.

This means that, legally speaking, Shell is now simultaneously a British public company, tax-resident in Amsterdam, whose brands are Swiss.

Shell says: “Shell Brands International paid Shell UK Ltd for certain trademarks. This payment was subject to corporation tax on capital gains in the UK. In the future, royalties are payable for the use of the trademark by UK companies”.

In fact, no tax was paid on the sale, because Shell was able to set it against other tax losses.

The Guardian also referred to Shell’s tax avoidance in its subsequent article: “Holding the UK’s major corporations to account“

Extracts

Our innovative online database helped shed light on the murky world of corporate tax avoidance

The series revealed the tax stratagems of many of Britain’s corporate household names. It documented brands shifted offshore by Diageo, Shell, and drug companies AstraZeneca and GlaxoSmithKline.

Royal Dutch Shell was also mentioned in an article published in January 2011 by “This is Money”, under the headline: “Revealed: Tax havens of the top 20 UK companies“

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